IKEA, H&M, Gap and Ben & Jerry’s are all lining up to take Israelis’ money. Why now?

Driving into the capital from Tel Aviv, commuters climb the winding ascent of Route 1 before finally leveling out and getting their first real glimpse of the city. Among the knot of roads, traffic and surrounding buildings, two structures jump out. The first is the light rail bridge, with its giant white pylon stretching into the sky, but equally prominent is the towering advertisement which spans the height of an office building to its left. Today, that space proudly announces the opening of H&M’s Jerusalem branch in the form of two smiling children – one with blonde hair and blue eyes, the other Asian.

Jerusalem isn’t exactly known for its blonde-haired, blue-eyed population, nor for its Asian residents. And yet like any good marketing strategy, the advertisement was no doubt deliberately designed to connect with those that see it. But do blondes and Asians really inspire a predominantly Jewish, conservative and largely religious city to go shopping?

Apparently so. On Tuesday, March 16, when Mayor Nir Barkat cut the ribbon to the store, a demographic cross-section of the city flooded in by the hundreds: religious and secular teenagers who were skipping class, religious and secular adults who were skipping work, mothers with babies (who incidentally helped with the shopping by donating valuable carriage space to piles of new clothes) and even a few men (“I thought I was in line for Beitar Jerusalem tickets,” joked Howard, a recent immigrant from California).

“H&M, specifically, tries to answer everybody’s different tastes,” Gilad Kroner, CEO of H&M Israel said in explaining the turnout at the opening of the Swedish fashion chain’s branch in the Jerusalem Mall.

Perhaps the explanation isn’t quite that simple. The opening of two H&M branches in Tel Aviv and Jerusalem was a consumer spectacle unprecedented in Israel, with media outlets covering the event en masse, and shoppers responding with behavior that at one point in Tel Aviv nearly deteriorated into an all-out stampede.

But where is this phenomenon coming from? Did Israel wake up one day and decide it had become a consumer-obsessed nation? Why the sudden exaggerated reaction to the opening of a store?

According to Dr. Hila Riener, professor in marketing at the Gilford Glazer School of Business and Management at Ben-Gurion University of the Negev, the process was not sudden at all.

“I don’t think that the interest in foreign chains or foreign brands is new,” Riener said. “I can remember as a child people were very excited about having Swiss chocolate and Swiss watches.”

But regarding companies like H&M specifically, she explained that they possess two qualities which make them especially attractive to the local market.

“What’s special about those brands is that they’re not expensive, and they’re foreign,” she said. “Consumers like inexpensive products, but they don’t want to be perceived as buying cheap. And when they buy foreign brands – well-known and established brands – it has this additional value.

“So it’s not like I’m buying cheap. I’m buying something that is inexpensive, but it’s a strong brand, it’s foreign.”

Many of those who waited in line at the Jerusalem Mall on the opening day of the H&M branch demonstrated that point perfectly.

“This is a beautiful store,” said Rosie, one of the first in and out of the store. “There are beautiful [products] that they don’t have in Israel... and the prices are much cheaper.”

“It’s, you know, chic,” agreed Penina, who had come with her children. “[The clothes are] European. You don’t see this stuff here.”

And then there was one woman who, with her husband at her side, described the situation more bluntly. “There are no nice [clothes] in Israel,” she said.

“Of course, you can buy something very simple [and synthetic] like this,” she added, tugging on her husband’s sweatshirt, “but I want something better.”

BUT THE question remains, why now? A global financial crisis has battered economies throughout the world, and consumers everywhere are tightening their belts and cutting back on spending. And yet, almost counterintuitively, foreign chains are flocking here.

“Why now, from the consumer’s point of view, is because we travel much more than we used to, and we’re much more familiar with international or global brands than we used to be, and those brands are much more accessible for us,” Riener explained. “A lot of people know Gap, a lot of people know H&M, because they go abroad, and [the products] are fairly inexpensive, and the [companies] recognize the potential.”

The fashion world isn’t alone in recognizing that potential. After an absence of nearly a decade, Ben & Jerry’s has finally returned to the country with two new branches in Ramat Hasharon and Modi’in, and 14 more expected to open soon. IKEA, the popular Swedish furniture store, opened a second massive branch in Rishon Lezion at the beginning of March.

And Israelis are responding in droves.

“2009 was a record-breaking sales year for IKEA in Israel,” said Aya Yaheli-Mizrachi, director of its public relations department. “IKEA brought in about NIS 500 million, and that was not despite the financial crisis, but rather because of it.

“IKEA, during the past few years, worked very, very hard to improve its customer service... and to show that we have good prices during the entire year. And we don’t need a financial crisis to bring down the prices. The consumer proved that this work paid off; despite the crisis, more people came to the store, and bought more.”

The ad campaigns utilized by foreign chains should therefore come as no surprise. From blondes and Asians modeling H&M clothing to all-English, no-Hebrew billboards pitching Gap products, it’s almost as if these companies are selling Israelis the opportunity to live here without having to look, live or eat Israeli.

Exactly so, says a spokeswoman for Ben & Jerry’s.

“In fact, it is that kind of illusion, you know. The feeling of being overseas.” she said. “We really, really want to emphasize that our brand is American. The brand is very popular in the United States. The design of the stores themselves is very much like the stores overseas.”

But not every Israeli is so quick or eager to adopt a foreign look.

“It’s ridiculous,” said Morris as he watched hundreds of shoppers wait for over an hour until the Jerusalem branch of H&M opened its doors. “I see in their window display those are the same shirts that I wear. Maybe they have ones in a prettier color.”

“I think that this whole story is really insulting,” said Yossi. “What is all this? What, do we have a clothes shortage in Israel?”

Yossi and Morris were not alone. While the long line of H&M fans chatted away as they eagerly awaited entry, equally loud was the chatter that surrounded them by other mall patrons questioning the unusual consumer hype.

Not surprisingly, those who were the least enthusiastic about the
foreign invasion were the Israeli brands which have the most to lose,
and they were hardly in the mood to talk. Calls to the popular clothing
chains H&O and Castro went unreturned, while the fashion company
Fox said only that it was unwilling to comment.

“Fox is not
interviewing, and is not responding to anything that is connected with
H&M or Gap,” a spokesman for the company said.

Regardless of
the near total silence from the Israeli fashion industry, one fact
can’t be denied. Competition is competition, and if that means a price
war, then that’s something all consumers will probably be happy about.